The Secret of Wealth Preservation - Jeff Nielson
January 10, 2017
We have a failure to communicate. The vast majority of the investment public in the Western world has no understanding – at all – about how to preserve and protect their wealth. Of the minority of the investment community with some understanding of wealth preservation, almost invariably it is a flawed understanding.
Understanding wealth preservation begins with having a detailed and correct understanding of “money”. Understanding money begins with correctly comprehending the difference between money and (mere) currency. Currency is merely a medium of exchange. It serves no other function and implies no other properties/qualities. What we have in our wallets is mere (fiat) currency.
Money, on the other hand, is a store of value – meaning it preserves and protects our wealth. A simple historical example illustrates this principle. Two thousand years ago during the Roman Empire; with a 1-oz gold coin, a gentleman of that era could purchase the finest suit of clothing: a high-quality toga, belt and sandals.
Five hundred years ago; with a 1-oz gold coin a gentleman of that era could purchase the finest suit of clothing: a tailor-made suit and accessories. Today, with that same 1-oz gold coin, we can still purchase a suit and accessories, but because of the extreme manipulation of the gold price, we are (temporarily) forced to buy our clothing “off the rack”.
That’s two thousand years of (perfect) wealth preservation for the holder of money. Understand that the same math holds true with silver. Until the last century, the gold-silver price ratio was fixed at 15:1. It’s only over the last hundred years that the bankers have been able to completely skew silver prices – at a cost of burning through 4,000 years of silver stockpiles .
Then we have our paper currencies. In the just-over 100 years in which the Federal Reserve has had the statutory responsibility of “protecting the dollar”, the U.S. dollar has lost 99% of its value. This is actually an understatement, since the dollar today is fundamentally worthless, and only maintains any value at all through the constant manipulation of the convicted currency manipulators , the West’s Big Banks (i.e. the One Bank ).
Money provides eternal wealth preservation. But with ‘leaky’ currency, our wealth can dissipate to zero, over the course of a single lifetime. How? Why don’t we ask Sir Alan Greenspan?
In the absence of the gold standard, there is no way to protect savings from confiscation through inflation.
- Alan Greenspan , 1966
When we had a gold standard, we had money, and our wealth was safe and secure. Robbed of our gold standard by the despicable Paul Volcker , we now only have currency, and thus our wealth is vulnerable to “confiscation through inflation”. Translation? Theft by money-printing.
The bankers print more of their funny-money (i.e. currency), and the total money supply increases. This causes prices to go up and the value of our currency to go down. And every time it happens, we lose more of any/all wealth which we choose to store in the bankers’ paper.
Where does the wealth go? Into the pockets of the money-printers (currency-creators). The bankers give themselves all of the newly-created funny-money, thus they don’t lose wealth to inflation – they gain wealth, our wealth. Theft by money-printing. It’s that simple, just ask the Criminals themselves.
Give me control of a nation’s money and I care not who makes its laws.
- Mayer Amschel Rotchschild (1744 – 1812)
Today, Western populations hold only about 1% as much physical bullion as was customary for our populations 100 years ago. Put another way, a century earlier; gold and silver were the primary vehicles of wealth preservation for the Average Person.
A century ago; very few people “invested” in our markets. Why? Were they too stupid? No, they were too smart. A century ago; we had real money, meaning that we were able to keep all of our wages – because there was no theft-by-money-printing. With the workers able to protect their wages, they didn’t need to “invest” their capital.
In other words, people didn’t need to gamble with their hard-earned wealth in the crooked casinos that the Big Banks call “markets”. It was only when we lost the gold standard, lost its protection, and began losing more and more wealth each year to “inflation” that people found it necessary to gamble with their savings. The only way for us to simply break even is if our winnings from our gambling at least equal our losses to “inflation” (banker theft).
By relentlessly stealing our wealth via inflation, the bankers force us to gamble in their rigged markets , where they can (potentially) steal much more of our wealth. Heads they win; tails we lose.
Many people reading this already understand much of this history, and much of the economic fundamentals behind it. Because of this, those readers already have some/most of their wealth protected-and-preserved by converting that wealth to gold and silver.
Yet even many of these people are less-than-content. Why? Because over the past six years, the nominal prices for gold and silver have been in steady decline. These people read over and over in the vacuous pages of the mainstream media that holders of gold and silver have been “losing money” in recent years on their investments.
The basis of this mythology is the product of two deceits from the Corporate media:
- Pretending there is “no inflation”.
- Always presenting their “analysis” of gold and silver markets using only the USD prices for gold and silver.
Taking these deceptions in order, obviously (1) is the more absurd of the two deceits. Food and shelter costs, the two most-important categories of consumption, are spiraling higher at the greatest rate in our lives, but there is “no inflation”. Right!
Inside the U.S., these inflation pressures have been somewhat muted by the relentless upward manipulation of the U.S. dollar, presently perched at a multi-year high versus almost every other currency in the world. Yet even inside the U.S.; John Williams of Shadowstats.com consistently estimates U.S. inflation between 4 – 8%, and arguably that is a very conservative estimate.
Outside the U.S., we have suffered the full ravages of banker money-printing plus the additional theft of wealth coming from the downward manipulation in the exchange rate of our currencies. The combined effect is an “inflation” rate of at least 15% per year – 15% per year of all our paper wealth.
However, every penny which we have previously preserved-and-protected by converting it to gold and silver has been immune to that theft of wealth. When the deceitful media talking-heads report the nominal declines in gold and silver prices, they never mention the hidden gains we have netted through being protected from “inflation” – meaning the financial crimes of bankers.
This brings us to (2): only presenting
precious metals prices denominated in U.S. dollars. Let’s put aside that world
for the moment, and only look at gold and silver priced in other currencies.
We see the price of gold peaking (in CAD’s) below $1,900/oz in 2011. In the 5 years since then; it’s fallen to roughly $1,550 (CAD). This works out to less than a 20% drop over 6 years, or an average “loss” of 3% per year. But wait! Add back the 15% per year which we did not lose on our gold and silver due to inflation, and for Canadian dollar holders, you have gained roughly 12% per year by holding gold during this “bear market”.
The argument for silver is less-bullish, in
paper terms. The price of silver has fallen roughly 50% in nominal terms,
equating to about an 8% “loss” per year – which then flips to a 7% per year
gain when we factor in the “inflation” loss we avoided. For Canadian dollar
holders, you have ‘only’ been gaining about 7% per year on your silver
For holders/users of the euro, the math here is similar. Between 2011 and the beginning of 2017; the price of gold went from a high below € 1,400 to a current price of a little over €1,100. This equates to roughly a 20% decline. In silver, silver has fallen roughly 50% in nominal terms, before we factor in inflation.
However, net “inflation” in Europe has been lower over this period since the euro hasn’t declined in value versus the USD by as large a margin as the collapse in value of the CAD (under Stephen Harper). Thus euro-holders have not gained quite as much as CAD-holders over the past 6 years by holding gold and silver.
It is only for USD-holders for whom holding precious metals has temporarily not been a winning strategy, and only because of the extreme, upward manipulation of the U.S. dollar which has mitigated the theft-by-money-printing scam of the Federal Reserve .
The USD gold price has fallen by roughly 40% over the past 6 years, representing a “loss” of less than 7% per year. Factor in annual U.S. inflation of at least 4 – 8%, and for Americans, you’ve only been breaking even on your gold holdings, during this wicked USD bear market for gold over that time. For American holders of silver, who have watched the USD price of silver decline by 2/3 since 2011, you have actually suffered a temporary loss in value on your silver holdings versus holding the (upwardly) manipulated dollar itself.
Let’s frame this in slightly different terms. In the most-bearish currency for precious metals, during the absolute best of times for the U.S. dollar, and the absolute worst of times for gold and silver, holders of the U.S. dollar have done slightly better than holders of gold and silver. In every other currency; during the worst of times for gold and silver, precious metals holders have prospered.
Should rational investors expect “the best of times” to continue for the U.S. dollar, given that the dollar is fundamentally worthless based upon several different metrics ? Probably not. Should rational investors expect the U.S.’s bubble markets to hold their value, following the most-extreme/most-extended “rally” since the Crash of ’29? Probably not. Should rational investors expect “the worst of times” to continue indefinitely for gold and silver, after already six years of bear market conditions? Probably not.
Look at the pumped-up (paper) markets of the U.S., and we see bubbles waiting to implode: the U.S. equities market bubbles, the U.S. bond-bubble, and (of course) the bubble-valuation of the worthless dollar itself.
Look at the massive, unrealized value of gold and silver due to the extreme downward manipulation in prices, and we see opportunity: the chance to hold History’s most-eternal wealth preservation vehicles, at bargain basement prices.
What is the secret of wealth preservation? It is a mind-numbingly simple equation, as explained by Sir Alan Greenspan and the patriarch of the Rothschild crime family: protect your wealth by placing it into the security of gold and silver, or wait for the bankers to steal all of it.
Jeff Nielson is co-founder and managing partner of Bullion Bulls Canada; a website which provides precious metals commentary, economic analysis, and mining information to readers and investors. Jeff originally came to the precious metals sector as an investor around the middle of last decade, but with a background in economics and law, he soon decided this was where he wanted to make the focus of his career. His website is www.bullionbullscanada.com.
The views and opinions expressed in this material are those of the author as of the publication date, are subject to change and may not necessarily reflect the opinions of Sprott Money Ltd. Sprott Money does not guarantee the accuracy, completeness, timeliness and reliability of the information or any results from its use.